The photo shows a Nio battery exchange station in Haikou, Hainan province, China, on May 9, 2023.
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BEIJING — Chinese electric car company Nioh has expanded its battery swapping partnerships to gain an infrastructure advantage in the EV ecosystem.
Since November, Nio has partnered with at least four Chinese automakers (Changan, Geely, Chery, and JAC) to develop battery replacement standards and expand its network in China. Earlier this year, Nio announced an agreement with two local battery companies to collaborate on battery replacement services.
All of these efforts are aimed at alleviating consumer range anxiety. Having a large network of battery charging stations can address these concerns, but it’s a quicker method since replacing a battery only takes a few minutes.
“Current swapping is mainly driven by Nio. Of course, Nio realized that this is an ecosystem,” Ding Luo, CLSA’s deputy head of research, said in an interview. “Even if one player tries to build an entire ecosystem, it is impossible. [them]. That’s why they’re wondering if they can invite their partner. ”
He added that battery replacement is not yet mainstream as car batteries need to be standardized.
The charging station resembles a typical gas station, but the battery swapping technology is built into a shed-like structure. Use a machine to automatically replace your compatible car’s depleted battery with a charged battery.
Nio announced in mid-March that it had completed 40 million battery replacements, compared to about 37 million charges at public stations. Nio consumers can also access third-party charging stations or install charging stations at home.
“I think our outlook is very simple,” Shen Fei, Nio’s senior vice president of power, told CNBC in a Chinese translation. “First, it’s about serving Nio’s users, providing them with a great battery charging and swapping experience, making charging more convenient than refueling, and at the same time helping the company sell more cars.”
The company claims that if a driver subscribes to a paid battery service plan, a battery swap can provide a new charge in three minutes.
More vehicle models will be added to Nio’s battery exchange network, Shen said, adding that the exchange will allow drivers to keep up with improvements in battery technology. He declined to say which automakers might be added to the network.
Power services and other products account for only about 10% of Nio’s total revenue. According to the company, the “other revenue” category in 2023 increased by 69% to 6.36 billion yuan ($895.9 million). Nio does not generate any Swap Station revenue.
The eventful past of battery replacement
Battery replacement has been tried in the industry, with particular success in the United States.
Tesla and a startup called Better Space tried to do a swap more than a decade ago, but the business quickly folded.
In 2021, another startup, Ample, opened a battery swap station in the San Francisco area for Uber drivers using Nissan Leafs.
It’s unclear how far Ample has progressed in the U.S., but the company has since expanded its partnerships overseas. The company announced last month that it would begin servicing corporate vehicles in Kyoto, Japan, and this year began partnering with Stellantis to replace batteries in Madrid, Spain.
“For a swap to work, it shouldn’t be niche,” said Tu Le, head of consulting firm Sino Auto Insights. “The investment in battery inventory is huge and must be amortized through multiple replacements.”
But he was cautious about whether Nio could sell enough of its luxury cars to make it economically viable. “Right now, we still think the combination of swapping and charging will be a very attractive feature set, but swapping alone won’t help sell that many cars.”
“I think the nudges that the Chinese government has given to encourage other countries to cooperate with the exchange with Nio could create the pool of vehicles needed to make the exchange happen,” he added.
The business of charging
Nio is the first major electric vehicle company to roll out battery swapping stations in addition to charging stations alongside its fleet in mainland China and Europe.
The company has installed more than 2,300 battery swap stations so far and plans to install 1,000 more this year.
Nio’s investment in battery swapping stations is about two years ahead of market demand, CEO William Lee said last month, with less than a fifth of Nio’s battery swapping stations operating at 60 per day. He added that this is probably the minimum order quantity required for the station to break even.
Meanwhile, Nio’s battery charging stations reportedly reached a profit last year. The company plans to build another 20,000 units this year.
Shay Natarajan, a North American-based partner at a private equity fund that invests in Mobility Impact Partners, said building a passenger car battery swapping station costs about $500,000, but it’s relatively basic with two ports. A typical charging station costs about $200,000 to $300,000. Transportation facilities.
CLSA’s Luo said companies also prefer investing in regular charging stations over swap stations because they offer higher profits. But he said companies could face grid challenges if they want to install fast-charging stations.
CLSA’s analysis found that five Superchargers at one location would require more power than 300 households would normally consume.
Tesla also works with automakers to charge batteries, with more than 50,000 Superchargers around the world claiming they can restore about two-thirds of a battery in 15 minutes.
In February, Ford reached a deal that will allow its electric vehicles to use Tesla Superchargers in North America. General Motors announced a similar agreement last year.
Sustainability considerations
The rapid development of electric vehicles, ostensibly aimed at reducing carbon emissions, has also raised questions about battery waste.
Nio pointed out that recent growth in new energy vehicles, including hybrid vehicles, means that nearly 20 million batteries will reach the end of their eight-year warranty period from 2025 to 2032.
Last month, the company announced a partnership with a battery giant. Modern Amperex technology To develop batteries with a long lifespan, especially those used in exchange stations.
Nio claimed that by leveraging battery swapping and big data, it is possible to maintain 80% of battery capacity even after 12 years of use. Nio also said last month that CATL would develop long-life batteries for the company.
—CNBC’s Lora Kolodny and Michael Wayland contributed to this report.
